Lenihan was overruled on state takeover of Anglo Irish
Central Bank Governor Patrick Honohan has revealed the late Brian Lenihan was overruled on immediately nationalising Anglo on the night of bank guarantee.
In his contribution to a new book of essays on the former Finance Minister, 'Brian Lenihan: In Calm and Crisis', Prof Honohan said Mr Lenihan wanted to immediately nationalise Anglo Irish Bank on the night of the infamous €440bn bank guarantee on September 29, 2008.
But Mr Honohan goes on to say that the rookie minister met stiff opposition from his officials and was ultimately overruled on the night.
"As he told me himself, Brian argued strongly for the immediate nationalisation of both Anglo and INBS - but officials cautioned that there would be operational risks in taking such action mid-week, and the idea certainly would not have appealed to all of his political colleagues; he was overruled on the night. Still, participants in the meetings were left with the expectation that this issue would be reopened at the weekend," Honohan wrote.
The Governor also said that Mr Lenihan should not be blamed for the decision to introduce the guarantee as the advice given on the night was incorrect. "Unfortunately, the advice he was being given was based on the flawed premise that the banks had sufficient capital," he wrote. Governor Honohan concluded that Anglo could not shake off the "reputational smell" that surrounded it.
"By early September 2010, Brian reluctantly recognised that this particular bird was not a phoenix and, at last, conceded that it should be moved into a wind-down mode," he added. Former ECB boss Jean Claude Trichet's role has come back into focus on foot of the revelations.